Once insulation gets wet, it's hard to dry it out. "It will sit there like a sponge, leading to mold problems and rot," says Tom. Vapor barriers—sheets of plastic or kraft paper—keep water vapor out of the wall cavity, so the insulation stays dry. Not every type of insulation needs a vapor barrier. But if it does, the barrier should face inside in northern, heating climates, and outside in humid southern climates.